Davey v. Lockheed Martin Corp.
301 F.3d 1204 (2002)
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Rule of Law:
A district court's refusal to modify a pretrial order under Rule 16(e) to allow a party to assert a new, controlling legal defense constitutes an abuse of discretion when the failure to do so would result in manifest injustice, especially when any prejudice to the opposing party could be cured by a continuance.
Facts:
- Susan Davey began working for Martin Marietta Corporation, now Lockheed Martin Corporation (LMC), as a test engineer in 1987.
- In 1991, Davey filed an internal ethics complaint alleging that her supervisor, Ronald Bills, engaged in gender-based favoritism regarding overtime pay and promotions.
- Following Davey's complaint, Bills resigned from his supervisory position, and Davey's immediate supervisor, Richard Turner, was also removed from his supervisory role.
- In 1992, a new department manager, John Shupe, informed Davey she would be part of a reduction in force.
- Davey's employment was terminated on April 12, 1993.
- After filing a lawsuit, Davey learned of job openings in her former department at LMC in 1997.
- Davey met with LMC managers Gary Mueller and Wayne Scott about the open positions but was ultimately not offered a job.
Procedural Posture:
- Susan Davey filed an action against Lockheed Martin Corporation (LMC) in federal district court on September 4, 1996, alleging gender discrimination and retaliation.
- Davey amended her complaint to add a second retaliation claim based on LMC’s 1997 refusal to rehire her.
- A jury trial was held, resulting in a verdict for LMC on the discrimination and 1993 retaliation claims, but for Davey on the 1997 retaliation claim.
- The district court entered judgment for Davey, awarding her compensatory damages, punitive damages, back pay, front pay, and attorney fees.
- LMC, as appellant, appealed the judgment on the 1997 retaliation claim to the U.S. Court of Appeals for the Tenth Circuit, with Davey as the appellee.
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Issue:
Does a district court abuse its discretion by denying a defendant's motion to amend a pretrial order to include a new affirmative defense established by a Supreme Court decision issued two months prior to trial, on the grounds that it would be fundamentally unfair to the plaintiff who had no opportunity for discovery on the issue?
Opinions:
Majority - Briscoe, Circuit Judge.
Yes. A district court abuses its discretion by refusing to allow an amendment to a pretrial order to prevent manifest injustice when controlling law changes shortly before trial. The Supreme Court's decision in Kolstad v. American Dental Assoc. established a new 'good-faith' affirmative defense to punitive damages under Title VII two months before this trial. LMC sought to amend the pretrial order to include this defense. The trial court denied the motion, citing prejudice to Davey, who had no time for discovery. This court found that while LMC's motion was untimely, the other factors for amending a pretrial order weighed in its favor. Specifically, there was no bad faith by LMC; any prejudice to Davey could have been cured by a continuance for limited discovery; and a continuance would have caused minimal disruption since the trial had not yet begun. Therefore, the district court's refusal to allow the amendment to prevent manifest injustice was an abuse of discretion, requiring the punitive damages award to be vacated and remanded for a new trial on that issue.
Analysis:
This decision clarifies the 'manifest injustice' standard for modifying pretrial orders under Federal Rule of Civil Procedure 16(e), particularly in response to intervening changes in controlling law. It establishes that the availability of a 'cure' for prejudice, such as a trial continuance, is a critical factor that can outweigh the untimeliness of a motion to amend. The ruling prioritizes the application of correct and current law over rigid adherence to scheduling, signaling to lower courts that they must be flexible when significant legal developments occur. This precedent influences litigation strategy by requiring parties to remain aware of legal changes up to the trial date and reinforces the idea that a full and fair adjudication on the merits includes the application of all relevant, available defenses.
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